Health Care Risk Management

Discretion Advised

Hospitals balance safety with necessary public care in high-risk departments.
By: | September 14, 2016 • 8 min read

Life-saving health care can be unpredictable, controversial and skirt the frontiers of science.

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Due to its very nature and the research methods it employs, this vital work sometimes attracts the attention of special interest groups, protestors and even criminals. That’s why health care risk managers need to balance access to care with the security issues some departments pose.

Animal testing, reproductive services and departments that house nuclear materials can all draw attention from those who would shut those operations down if they could, or at the very least, harm a hospital system’s reputation.

Take, for example, family planning.

After a deadly shooting at a Colorado Planned Parenthood office, an abortion doctor named Diane Horvath-Cosper gave several press interviews where she vowed to continue with her services and advocate for family planning rights at her Washington, D.C., hospital.

Soon after the news stories aired, she was called in to see the chief medical officer.

Sean Ahrens practice leader, security consulting and design, Jensen Hughes

Sean Ahrens
practice leader, security consulting and design, Jensen Hughes

The executive asked Horvath-Cosper to stop talking to reporters because he did “not want to put a K-Mart blue light special on the fact that we provide abortions,” she later said.

Horvath-Cosper did stop her media interviews. And then she filed a civil rights complaint against the hospital. She alleged the hospital discriminated against her for expressing her moral conviction on abortion. The hospital should instead bolster security, the complaint said.

The hospital did hire a security guard and install cameras. Yet it didn’t follow through on many other suggested measures, such as installing shatterproof glass or an intercom system, she said.

The Need to be Discreet

This case highlights the difficulties hospitals face when they need to be protective of their operations to avoid drawing attention from vocal activists or violent actors.

Today’s health systems are often vast networks offering not only medical care, but also advanced research, retail stores, pharmacy and social services. Each hospital network is searching for ways to prop up revenue while providing cutting-edge care ahead of the competition.

But before adding new business lines, experts caution that hospital administrators weigh all reputational and security risks they may attract, and continually reassess those risks based on a changing environment.

Once risk managers know the risks and plan for them properly, they should be able to weather most storms.

The University of Washington is pressing on with the construction of a new underground animal research facility adjacent to its hospital despite continuous protests by animal rights organizations.

This spring, members ofNo New Animal Lab” shut down construction for a day when two protesters chained themselves to an excavator working on the site. Several people were arrested for criminal sabotage.

The protesters even went to the vacation home of a construction company executive in Fort Lauderdale, Fla., and scrawled chalk messages all over his driveway that accused him of killing puppies and kittens.

“Even though you may keep it quiet, the reality is people will know; those interest groups will know and they will target you as far as media and protests,” said Jeff Young, president of the International Association for Healthcare Security & Safety (IAHSS).

“Whether abortion or animal research, there are very active groups out there that protest hospitals on a regular basis,” he said.

Conduct Regular Assessments

The hot-button issues in hospital settings aren’t limited to family planning or animal research.

Today’s state-of-the-art teaching hospitals usually house nuclear materials; they’re conducting gene trials and banking dangerous disease samples while hunting for cures.

That is a whole new risk as far as environmental factors, accidental disbursement or terrorism if the samples get into the wrong hands.

Jeff Young President, International Association for Health Care Security & Safety

Jeff Young
President, International
Association for Health Care Security & Safety

Some hospitals have even quietly set up onsite “forensic” units dedicated to the care of dangerous prisoners and the mentally ill.

Often these ancillary departments coexist unseen in health care complexes. But if promoted, they may attract bad actors seeking to steal valuable items or cause harm to the public.

Hospitals must provide an extra layer of protection for the staff and public who may venture into these high-risk areas, and also make sure high-risk materials or people don’t get out.

“An organization needs to consider that risk even before they decide to go in that area,” Young said.

To properly prepare, risk managers must strategically work with co-workers and service providers to manage these reputational risks. They need to conduct regular assessments to stay ahead of changes in the community and fortify security.

“There needs to be a communication plan and a media plan to respond to those outside groups that will comment or protest against the services that will be provided,” Young said.

Then there must be a thorough security assessment.

The University of Washington is pressing on with the construction of a new underground animal research facility adjacent to its hospital despite continuous protests by animal rights organizations.

“Really good hospitals do their assessment, they find things and they audit that assessment every year to see if there are changes and if they are cost-effective,” said Sean Ahrens, practice leader for security consulting and design at Jensen Hughes.

The risk assessment should account for the hospital’s environment and surrounding community and also anticipate future changes, Ahrens said.

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Every employee has to be aware and on the lookout for problems, and know what to say and how to react if they encounter a problem, said Maureen Archambault, regional managing director of health care services at Arthur J. Gallagher & Co.

It’s not just going to be to an administrator or security guard encountering problems, she said. Training needs to reach all employees working in the hospital.

“It’s great to have a plan. But if people can’t follow it and don’t understand it, it’s not going to happen,” Archambault said.

Safety drills in partnership with community first responders are also vital practices to test and teach security procedures, she said.

One challenge in risk prevention strategies is that extra security recommendations are often seen as an increased cost. And the hospital needs to decide if their community is comfortable with the presence of armed guards.

“Security obviously has a benefit, but it’s always seen as a cost,” Ahrens said.

Administrators need to view security personnel as cost savers, he said. If a security guard is added in the emergency room and an attack never occurs, administrators may ask if the extra personnel was a cost or a valuable deterrent.

“Having a security presence in the emergency department potentially precludes someone from bringing a weapon, but we’ll never know for sure,” Ahrens said.

Young, with IAHSS, emphasizes that security personnel also should be viewed as part of the patient care team.

“I’m a health care worker; I just happen to do security,” Young said.

“Everything we do in health care security, we should be able to track back to patient care or patient experience,” Young said.

Every hospital is unique, so there is no generic template to follow. Whether in a city or rural community, the environment inside and outside the hospital dictates the controls that are put in place, Ahrens said.

“There are so many things going on in hospitals, they are no longer safe havens and it seems to be escalating,” Archambault said.

Hospitals allow public access 24 hours a day. The halls are teeming with patients, visitors, vendors, doctors, nurses, office workers and students.

“Having a security presence in the emergency department potentially precludes someone from bringing a weapon, but we’ll never know for sure.” –Sean Ahrens, practice leader, security consulting and design, Jensen Hughes

While off-hours visitor restrictions reduce the population, the hospital still needs to remain welcoming to all who need it. Extra security layers should not prevent access to care.

“It used to be a safe haven but now we are seeing more and more of the outside influences coming within the walls of the hospital,” Young said.

Sealed Source Materials for Dirty Bombs

High-risk radioactive material is also stored in hospitals and could be targeted by terrorists.

Medical uses for the material include treating cancer patients, purifying blood, or conducting tests and research.

To prevent dispersal once the material is used, it is typically sealed in a stainless steel, titanium or platinum capsule called a sealed source.

The concern is that terrorists could obtain sealed source containers to make a “dirty bomb.” So hospitals must reinforce security and supervision in the area where the material is used or stored.

The National Nuclear Security Administration (NNSA) identified about 1,500 U.S. hospitals and medical facilities with high-risk radiological sources that contain approximately 28 million curies of radioactive material and are candidates for security upgrades.

A 2012 government survey found that NNSA spent $105 million to help 321 hospitals complete security upgrades, such as remote monitoring systems, surveillance cameras, enhanced security doors, iris scanners, motion detectors and tamper alarms. This program continues through 2025.

While the government encourages extra security and offers some assistance to pay for it, the program isn’t mandatory and some hospitals passed on the offer, leaving potential vulnerabilities.

Insurance support

Many hospitals struggle to obtain the right balance of insurance for these high-risk areas.

The Terrorism Risk Insurance Act (TRIA), created in 2002, is triggered by a government-certified act of terrorism, including use of unconventional weapons, also known as nuclear, biological, chemical, or radiological (NBCR) weapons.

The challenge many hospitals face in terms of TRIA is that an active shooter event may not be ruled a terrorist act by the U.S. government.

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That leaves the hospitals without coverage for damage to visitors, patients or staff.

One newer product is stand-alone violence and malicious acts coverage, said Archambault. This is different from terrorist coverage created after the Sept. 11 attacks.

Stand-alone insurance provides a much broader coverage without government certification.

Another solution that has been discussed for a number of years is allowing insurers to accumulate tax-deferred catastrophe reserves.

“We need to be asking, ‘What are the specific differences in exposure and what special insurance products aim to address it?’ ” Archambault said. &

Juliann Walsh is a staff writer at Risk & Insurance. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Exclusive | Hank Greenberg on China Trade, Starr’s Rapid Growth and 100th, Spitzer, Schneiderman and More

In a robust and frank conversation, the insurance legend provides unique insights into global trade, his past battles and what the future holds for the industry and his company.
By: | October 12, 2018 • 12 min read

In 1960, Maurice “Hank” Greenberg was hired as a vice president of C.V. Starr & Co. At age 35, he had already accomplished a great deal.

He served his country as part of the Allied Forces that stormed the beaches at Normandy and liberated the Nazi death camps. He fought again during the Korean War, earning a Bronze Star. He held a law degree from New York Law School.

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Now he was ready to make his mark on the business world.

Even C.V. Starr himself — who hired Mr. Greenberg and later hand-picked him as the successor to the company he founded in Shanghai in 1919 — could not have imagined what a mark it would be.

Mr. Greenberg began to build AIG as a Starr subsidiary, then in 1969, he took it public. The company would, at its peak, achieve a market cap of some $180 billion and cement its place as the largest insurance and financial services company in history.

This month, Mr. Greenberg travels to China to celebrate the 100th anniversary of C.V. Starr & Co. That visit occurs at a prickly time in U.S.-Sino relations, as the Trump administration levies tariffs on hundreds of billions of dollars in Chinese goods and China retaliates.

In September, Risk & Insurance® sat down with Mr. Greenberg in his Park Avenue office to hear his thoughts on the centennial of C.V. Starr, the dynamics of U.S. trade relationships with China and the future of the U.S. insurance industry as it faces the challenges of technology development and talent recruitment and retention, among many others. What follows is an edited transcript of that discussion.


R&I: One hundred years is quite an impressive milestone for any company. Celebrating the anniversary in China signifies the importance and longevity of that relationship. Can you tell us more about C.V. Starr’s history with China?

Hank Greenberg: We have a long history in China. I first went there in 1975. There was little there, but I had business throughout Asia, and I stopped there all the time. I’d stop there a couple of times a year and build relationships.

When I first started visiting China, there was only one state-owned insurance company there, PICC (the People’s Insurance Company of China); it was tiny at the time. We helped them to grow.

I also received the first foreign life insurance license in China, for AIA (The American International Assurance Co.). To date, there has been no other foreign life insurance company in China. It took me 20 years of hard work to get that license.

We also introduced an agency system in China. They had none. Their life company employees would get a salary whether they sold something or not. With the agency system of course you get paid a commission if you sell something. Once that agency system was installed, it went on to create more than a million jobs.

R&I: So Starr’s success has meant success for the Chinese insurance industry as well.

Hank Greenberg: That’s partly why we’re going to be celebrating that anniversary there next month. That celebration will occur alongside that of IBLAC (International Business Leaders’ Advisory Council), an international business advisory group that was put together when Zhu Rongji was the mayor of Shanghai [Zhu is since retired from public life]. He asked me to start that to attract foreign companies to invest in Shanghai.

“It turns out that it is harder [for China] to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

Shanghai and China in general were just coming out of the doldrums then; there was a lack of foreign investment. Zhu asked me to chair IBLAC and to help get it started, which I did. I served as chairman of that group for a couple of terms. I am still a part of that board, and it will be celebrating its 30th anniversary along with our 100th anniversary.

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We have a good relationship with China, and we’re candid as you can tell from the op-ed I published in the Wall Street Journal. I’m told that my op-ed was received quite well in China, by both Chinese companies and foreign companies doing business there.

On August 29, Mr. Greenberg published an opinion piece in the WSJ reminding Chinese leaders of the productive history of U.S.-Sino relations and suggesting that Chinese leaders take pragmatic steps to ease trade tensions with the U.S.

R&I: What’s your outlook on current trade relations between the U.S. and China?

Hank Greenberg: As to the current environment, when you are in negotiations, every leader negotiates differently.

President Trump is negotiating based on his well-known approach. What’s different now is that President Xi (Jinping, General Secretary of the Communist Party of China) made himself the emperor. All the past presidents in China before the revolution had two terms. He’s there for life, which makes things much more difficult.

R&I: Sure does. You’ve got a one- or two-term president talking to somebody who can wait it out. It’s definitely unique.

Hank Greenberg: So, clearly a lot of change is going on in China. Some of it is good. But as I said in the op-ed, China needs to be treated like the second largest economy in the world, which it is. And it will be the number one economy in the world in not too many years. That means that you can’t use the same terms of trade that you did 25 or 30 years ago.

They want to have access to our market and other markets. Fine, but you have to have reciprocity, and they have not been very good at that.

R&I: What stands in the way of that happening?

Hank Greenberg: I think there are several substantial challenges. One, their structure makes it very difficult. They have a senior official, a regulator, who runs a division within the government for insurance. He keeps that job as long as he does what leadership wants him to do. He may not be sure what they want him to do.

For example, the president made a speech many months ago saying they are going to open up banking, insurance and a couple of additional sectors to foreign investment; nothing happened.

The reason was that the head of that division got changed. A new administrator came in who was not sure what the president wanted so he did nothing. Time went on and the international community said, “Wait a minute, you promised that you were going to do that and you didn’t do that.”

So the structure is such that it is very difficult. China can’t react as fast as it should. That will change, but it is going to take time.

R&I: That’s interesting, because during the financial crisis in 2008 there was talk that China, given their more centralized authority, could react more quickly, not less quickly.

Hank Greenberg: It turns out that it is harder to change, because they have one leader. My guess is that we’ll work it out sooner or later. Trump and Xi have to meet. That will result in some agreement that will get to them and they will have to finish the rest of the negotiations. I believe that will happen.

R&I: Obviously, you have a very unique perspective and experience in China. For American companies coming to China, what are some of the current challenges?

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Hank Greenberg: Well, they very much want to do business in China. That’s due to the sheer size of the country, at 1.4 billion people. It’s a very big market and not just for insurance companies. It’s a whole range of companies that would like to have access to China as easily as Chinese companies have access to the United States. As I said previously, that has to be resolved.

It’s not going to be easy, because China has a history of not being treated well by other countries. The U.S. has been pretty good in that way. We haven’t taken advantage of China.

R&I: Your op-ed was very enlightening on that topic.

Hank Greenberg: President Xi wants to rebuild the “middle kingdom,” to what China was, a great country. Part of that was his takeover of the South China Sea rock islands during the Obama Administration; we did nothing. It’s a little late now to try and do something. They promised they would never militarize those islands. Then they did. That’s a real problem in Southern Asia. The other countries in that region are not happy about that.

R&I: One thing that has differentiated your company is that it is not a public company, and it is not a mutual company. We think you’re the only large insurance company with that structure at that scale. What advantages does that give you?

Hank Greenberg: Two things. First of all, we’re more than an insurance company. We have the traditional investment unit with the insurance company. Then we have a separate investment unit that we started, which is very successful. So we have a source of income that is diverse. We don’t have to underwrite business that is going to lose a lot of money. Not knowingly anyway.

R&I: And that’s because you are a private company?

Hank Greenberg: Yes. We attract a different type of person in a private company.

R&I: Do you think that enables you to react more quickly?

Hank Greenberg: Absolutely. When we left AIG there were three of us. Myself, Howie Smith and Ed Matthews. Howie used to run the internal financials and Ed Matthews was the investment guy coming out of Morgan Stanley when I was putting AIG together. We started with three people and now we have 3,500 and growing.

“I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.” — Maurice “Hank” Greenberg, chairman and CEO, C.V. Starr & Co. Inc.

R&I:  You being forced to leave AIG in 2005 really was an injustice, by the way. AIG wouldn’t have been in the position it was in 2008 if you had still been there.

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Hank Greenberg: Absolutely not. We had all the right things in place. We met with the financial services division once a day every day to make sure they stuck to what they were supposed to do. Even Hank Paulson, the Secretary of Treasury, sat on the stand during my trial and said that if I’d been at the company, it would not have imploded the way it did.

R&I: And that fateful decision the AIG board made really affected the course of the country.

Hank Greenberg: So many people lost all of their net worth. The new management was taking on billions of dollars’ worth of risk with no collateral. They had decimated the internal risk management controls. And the government takeover of the company when the financial crisis blew up was grossly unfair.

From the time it went public, AIG’s value had increased from $300 million to $180 billion. Thanks to Eliot Spitzer, it’s now worth a fraction of that. His was a gross misuse of the Martin Act. It gives the Attorney General the power to investigate without probable cause and bring fraud charges without having to prove intent. Only in New York does the law grant the AG that much power.

R&I: It’s especially frustrating when you consider the quality of his own character, and the scandal he was involved in.

In early 2008, Spitzer was caught on a federal wiretap arranging a meeting with a prostitute at a Washington Hotel and resigned shortly thereafter.

Hank Greenberg: Yes. And it’s been successive. Look at Eric Schneiderman. He resigned earlier this year when it came out that he had abused several women. And this was after he came out so strongly against other men accused of the same thing. To me it demonstrates hypocrisy and abuse of power.

Schneiderman followed in Spitzer’s footsteps in leveraging the Martin Act against numerous corporations to generate multi-billion dollar settlements.

R&I: Starr, however, continues to thrive. You said you’re at 3,500 people and still growing. As you continue to expand, how do you deal with the challenge of attracting talent?

Hank Greenberg: We did something last week.

On September 16th, St. John’s University announced the largest gift in its 148-year history. The Starr Foundation donated $15 million to the school, establishing the Maurice R. Greenberg Leadership Initiative at St. John’s School of Risk Management, Insurance and Actuarial Science.

Hank Greenberg: We have recruited from St. John’s for many, many years. These are young people who want to be in the insurance industry. They don’t get into it by accident. They study to become proficient in this and we have recruited some very qualified individuals from that school. But we also recruit from many other universities. On the investment side, outside of the insurance industry, we also recruit from Wall Street.

R&I: We’re very interested in how you and other leaders in this industry view technology and how they’re going to use it.

Hank Greenberg: I think technology can play a role in reducing operating expenses. In the last 70 years, you have seen the expense ratio of the industry rise, and I’m not sure the industry can afford a 35 percent expense ratio. But while technology can help, some additional fundamental changes will also be required.

R&I: So as the pre-eminent leader of the insurance industry, what do you see in terms of where insurance is now an where it’s going?

Hank Greenberg: The country and the world will always need insurance. That doesn’t mean that what we have today is what we’re going to have 25 years from now.

How quickly the change comes and how far it will go will depend on individual companies and individual countries. Some will be more brave than others. But change will take place, there is no doubt about it.

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More will go on in space, there is no question about that. We’re involved in it right now as an insurance company, and it will get broader.

One of the things you have to worry about is it’s now a nuclear world. It’s a more dangerous world. And again, we have to find some way to deal with that.

So, change is inevitable. You need people who can deal with change.

R&I:  Is there anything else, Mr. Greenberg, you want to comment on?

Hank Greenberg: I think I’ve covered it. &

The R&I Editorial Team can be reached at [email protected]